How an Ecommerce Broker Can Help You Sell Your Business for Maximum Value

If you’re an online business owner seeking to sell your business for maximum value, working with an ecommerce broker can go a long way in helping you craft a successful exit strategy. 

In this article, we cover everything you need to know about working with an ecommerce broker, including: 

• What an ecommerce broker does—and what sets them apart from traditional brokers
• How you can determine whether you should work with a broker to sell your ecommerce business
• The benefits of hiring an ecommerce broker 
• Key questions to ask to help you find the right ecommerce broker for you

 

What is an ecommerce broker?  

Before we discuss whether you should work with a business broker (also known as an Advisor), it’s important to define our terms. So just what does an ecommerce broker do? Simply put, brokers help entrepreneurs sell their online businesses. 

A broker can help you navigate the sales process. The services they provide include:

• A professional valuation of your company to ensure you’re selling your business for maximum value
• Guidance on how to increase your business’s value before selling
• The creation of a marketing package to showcase your online business to potential buyers
• Access to their network of qualified buyers interested in purchasing online businesses
• Assistance with negotiating offers from financial or strategic buyers 
• Working with both you and the potential buyer to close the deal 
• Minimizing any confusion when you transfer business ownership 

When you work with a knowledgeable business broker, you can be confident the online business you built is valued for what it is really worth. That means you avoid the risk of leaving money on the table by miscalculating your business value, forgetting crucial add-backs, or missing opportunities that could increase your business value. 

The access to a large pool of high-quality buyers interested in purchasing businesses just like yours is another benefit of working with an ecommerce broker. 

It’s important to note that working with a broker will require you to pay a commission. But an accurate valuation of your successful ecommerce business, better deal terms, and the additional confidence as a business owner that you’ll experience can more than make up for the price you’ll pay to work with a broker. 

What is the difference between an ecommerce broker and a traditional business broker? 

The exit process for an ecommerce business owner can look different than the sale of a brick-and-mortar business. While traditional business brokers have the capacity to help you sell your business, there are several reasons to look for a broker who specializes in ecommerce business sales, including:

• Access to buyers interested specifically in online businesses
• Specialized understanding of online business valuation
• Knowledge of what buyers want to know when they assess your online business 

Regardless of whether you ultimately decide to work with a business broker or sell your business on your own, talking with a business brokerage firm can provide perspective and knowledge on the selling process. 

When to use an ecommerce broker

There are several approaches you can take as a business owner looking to make a successful exit: 

• Working with a qualified business broker 
• Selling directly to a buyer  

Who should consider hiring an ecommerce broker? 

Working with a qualified business Advisor means you can be confident you’re selling your business for maximum value. Brokers also share your business listing with a larger number of buyers, which can be invaluable in helping you find the right person to take over your ecommerce business. 

Business brokers also work alongside you through each step of the sales process. From marketing to evaluating offers, they’re an incredible resource for knowledge. They can also help you as you prepare financial statements and navigate the due diligence process of a business sale. 

Why not just sell your e-business yourself? 

There are several ways you can sell your business directly to a buyer. Maybe you’re a well-established business owner in ecommerce marketplaces and you have a network of fellow ecommerce business owners. It’s possible you could connect with a potential buyer for your business whom you already know.

If you sell directly to a buyer without a third-party broker, you avoid paying a commission to a business broker. However, even if you’ve been a business owner for years, you still have a relatively small pool of potential buyers to choose from. And you might be missing opportunities you didn’t know existed in other circles of business owners. 

When selling your business yourself, you could also list your business on online marketplaces. If you own a small business (worth less than $100,000), this could be a great option. The negative side of this option is that many buyers on these marketplaces don’t have the funding or skill set to purchase your ecommerce business. 

Even if you choose not to work with a broker, the benefit of receiving a professional valuation of your business is crucial. When you know what your business is actually worth, you’re better equipped to negotiate offers when you’re ready to sell a website. 

Additionally, brokers can help you identify high-leverage opportunities to increase the value of your business. As a business owner, you can use that information to make improvements to your business before going to market. 

Reasons to work with an ecommerce broker

Working with a broker can help make the sale of your online business a smooth and secure process. Some of the benefits of working with a broker include: 

• An accurate valuation of your business to ensure you’re receiving the maximum value for what you’ve worked hard to build 
• Knowledge and experience of what potential buyers are looking for in an online business
• Access to a brokerage firm’s large pool of quality buyers
• The experience to make sure your sale is secure

Hiring an ecommerce broker can help you sell your business for maximum value

Most online businesses are valued using something called the SDE Multiple Method. This method involves two parts: the SDE and the multiple. 

SDE stands for seller’s discretionary earnings—the pre-interest and pretax profits your online business makes before you take into account noncash expenses, one-time investments, your owner benefits, and any unrelated discretionary expenses or income. In simple terms, SDE is the total amount of money your ecommerce business generates for a single owner. 

After you know what your SDE is, you multiply that number by the multiple. So if your ecommerce business generates $200,000 in SDE and is valued at a 4x multiple, it’s worth $800,000 ($200,000 x 4 = $800,000). 

The Four Pillars of Value

When you go through the valuation process with Quiet Light brokerage, a knowledgeable business broker looks at every aspect of your business to determine where your business stands in regard to our Four Pillars of Value. These pillars include: 

• Growth
• Risk
• Transferability
• Documentation

Working with a business broker can ensure you calculate your SDE accurately and land on a purchase price that honors the business you’ve spent time and energy building. 

Brokers can also help identify opportunities to increase the value of your business. Past and current growth trends in your business have an impact on how potential buyers perceive its value. Discovering new ways to grow your business can attract a higher sales price in the future. This is especially true if you’re planning on making your exit 6-12 months from now.

Not only can a broker provide a business valuation and suggestions for growing the overall value of your company, they also have knowledge of deal terms. Many times when ecommerce business owners navigate the sale of a business on their own, the deal terms with a potential buyer are centered on the future performance of their business. 

That kind of deal structure puts the majority of the pressure on you as the seller. When you work with an ecommerce broker, they can help you structure a deal that benefits you as the seller instead. 

Ecommerce brokers know what buyers are looking for in an online business

Experienced brokers bring both knowledge and experience of the online business model. Because they’ve helped other online business owners sell their businesses, they know what buyers are looking for and understand the deal flow. 

This knowledge helps a broker present your business in a way that grabs the interest of potential buyers. This helps you avoid presenting your business without clarity and coming off as untrustworthy to potential buyers. 

You’ll gain access to a large pool of quality buyers 

Finding a buyer is a critical part of a successful exit. Business brokers have access to a large pool of quality buyers. 

When you have multiple buyers looking at your business, it can increase the pressure on the offer price, which is great news for you as an ecommerce business owner.

A broker’s experience can ensure your sale is safe and secure

When working with online business owners, ecommerce brokers work to cultivate relationships. Through their experience in selling other businesses, they’ve built relationships with buyers and have a finger on the pulse of the business market. 

This experience brings security to you as a seller. You don’t have to sort through more complex aspects of selling your business alone or run the risk of missing an important step that undermines the deal. Instead, you can confidently work through the sales process with an experienced broker as your guide. 

Questions to ask when considering an ecommerce broker

If you decide to work with a business broker to sell your online business, it’s important to hire someone who is knowledgeable, qualified, and honest. 

Here are a few different questions you can use to start a conversation with a broker you’re thinking about hiring:

• What does their valuation process look like?
• Can they tell you about their buying network?
• What is their area of expertise? 
• Do their goals align with the goals you have for selling your business?

What does their valuation process look like?

The valuation of your business is one of the first steps of working with a business broker. During this process, pay attention to how the broker handles things. Are they asking questions specific to your ecommerce business so they can accurately and honestly evaluate your business? Or are you having to bring up aspects of your online business they didn’t know to ask about?

It’s also important to keep an eye on the number they show you after their valuation. Does it seem inflated? Are they quick to agree with the value you give them without doing much research? 

Each of these instances could point to ecommerce brokers who aren’t helping you set realistic expectations for the sale of your business. 

Can they tell you about their buying network? 

One benefit of working with a broker is access to a wide pool of high-quality buyers. What does their buying network look like? Are they mostly networked with potential buyers who are interested in an online business model?

If they’re an experienced broker, they’ve spent time building business relationships. It’s not uncommon for a broker to have a connection with a previous buyer who’s the perfect fit for your business sale. If so, this could open up new opportunities you might not have encountered if you sold your business on your own. 

What is their area of expertise? 

When looking for a business broker, it’s important to find someone who specializes in ecommerce. Because of the differences in these kinds of deals (like the ones we mentioned above), this experience and expertise is beneficial to you as a seller. 

Does the brokerage firm work with other ecommerce business owners? Or is their portfolio mostly centered on brokering deals for business owners of traditional brick-and-mortar stores? 

Do their business goals complement yours? 

The best business broker for you to work with is one whose business goals align with the plans and dreams you have for selling your business. 

Be aware of the subtle terms or concepts a broker uses in those initial conversations. If they’re more worried about how much commission they’ll make from the sale of your business than they are about educating you about how to increase the value of your business and respecting your decisions, don’t be afraid to look elsewhere. 

Keep some details (like your desired selling price) private until you know whether this is a business broker you can trust with your business. A good broker is someone who should be honored to be chosen as your business partner during this last stage of your business plan. 

There are many reasons to consider working with an experienced and knowledgeable broker when you’re thinking about selling your online business. Our experience here at Quiet Light shows that sellers who work with a business broker usually get maximum value, better deal terms, and access to more qualified buyers. 

If you’d like a free, no-obligation valuation of your online business, reach out to us—we’d love to learn more about you and the dreams you have for your business!